Hanjin Ship Unloading at Long Beach After Bankruptcy Ruling
A Hanjin Shipping Co. vessel began unloading its part of $14 billion worth of cargo Sept. 10 at the Port of Long Beach in California after a U.S. court granted the company a reprieve from having its assets seized, easing a cargo bottleneck resulting from the container line’s filing for bankruptcy protection.
The Hanjin Greece had been stranded near Long Beach since Aug. 31 after its parent company filed for court receivership in South Korea. Port workers began taking its cargo ashore at 8 a.m. local time and should continue until Sept. 12, Noel Hacegaba, chief commercial officer of the Port of Long Beach, said in a telephone interview. The Hanjin Gdynia will follow next week, he said. The Hanjin Greece is carrying “electronics, furniture, footwear and virtually anything a consumer would expect to find on the shelves leading up to the holiday season,” he said.
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Hanjin also won relief Sept. 10 from its biggest shareholder, Korean Air Lines Co., which agreed to provide 60 billion won ($54 million) in funds to help pay for goods to be unloaded from its containerships. Together with the U.S. bankruptcy court’s decision, this means Hanjin vessels can dock and unload some of the estimated $14 billion of goods for companies, including Samsung Electronics Co. and Nike Inc. that have been stuck during the peak shipping period ahead of the U.S. Thanksgiving and Christmas shopping season.
“While it will take some time to fully resolve the situation, we expect slowly to start seeing some improvements,” the government said in the statement.
U.S. Bankruptcy Judge John Sherwood in Newark, New Jersey, on Sept. 9 granted Hanjin Shipping protection under Chapter 15 of the Bankruptcy Code, which shields foreign companies from lawsuits by U.S. creditors while they reorganize in another country. Sherwood had given provisional protection on Sept. 6, and his latest ruling broadened that legal shield and extended it.
The U.S. relief was granted over an objection from two terminal operators that warned of docking disasters, with one citing the fear that Hanjin ships would be stuck in its berths, unable to afford the fuel needed to depart.
The South Korean government said Sept. 10 it will work with the court, Hanjin Shipping, Hanjin Group and creditors to solve financial issues faced by the company in unloading cargo.
It also said nine more vessels will be deployed to Southeast Asia to take on cargo from Hanjin’s ships and help alleviate disruptions to the global supply chain, without identifying the companies involved.
Separately, Hyundai Merchant Marine Co. previously said it would deploy nine vessels to Europe and four to the United States and would form an alliance with three other South Korean lines to offer services to Southeast Asia to minimize disruptions in the region.
Korean Air’s board met Sept. 10 and agreed to offer the funds, if Hanjin Shipping hands over its stake in a terminal at the Port of Long Beach as collateral, after failing to reach a decision in two previous meetings.
The money is part of 100 billion won that Hanjin Group, which controls Korean Air, said Sept. 6 that it would provide to help ease the supply-chain disruptions. The amount includes 40 billion won that Chairman Cho Yang Ho plans to offer next week. South Korea’s ruling Saenuri Party also proposed that the government offer about 100 billion won in low-interest loans on condition the owners provide collateral.
Hanjin Shipping, the world’s seventh-largest container shipping line, fell victim to a global trade slump and container overcapacity that have depressed freight rates and piled up debt at the company. The shipping line applied for Chapter 15 protection in the United States on Sept. 2.
Hanjin filed for protection after lenders led by Korea Development Bank on Aug. 30 rejected a restructuring proposal by the Seoul-based company, which had been trying to reschedule debt under a voluntary creditor-led program since May.
